MKTM028 Strategic Marketing Sustainable Competitive Advantage Week 7 Dr Stephen Castle Dr Elizabth Kim Iain Bromley

Learning Objectives: By the end of this session students will understand and appreciate: Why sustainable competitive advantage is important How competitive advantage is achieved in the first place and How competitive advantage is sustained in the long term

Creating Sustainable Competitive Advantage What contributes to creating customer value? Ask the question - Does this resource contribute to creating value for customers that can be leveraged to create value for the organisation? (Hooley at al, 2012)

Creating Sustainable Competitive Advantage We will be looking at this over the next weeks…. Through the configuration of resources Through S-T-P Through the marketing mix – product….

Advantage-creating resources Hooley et al (2012)

Resource imitability ladder Adapted from Collis and Montgomery (1997). Hooley et al (2012)

Generic routes to competitive advantage Porter (1980) cost leadership & differentiation How do you actually achieve cost leadership? Porter (1985) talked of “cost drivers” Is cost leadership a “production orientation?”

Porter’s cost drivers……….. Economies of scale – bigger always best? The experience curve – sounds good? Capacity utilisation – why is it good? Linkages – examples Interrelationships – how do they add value? Timing – “strategic windows”

Generic routes to competitive advantage creation Hooley et al (2012) Generic routes to competitive advantage creation

Uniqueness drivers Hooley et al (2012)

Achieving differentiation Linked very closely to “policy choices” Product differentiation – generic, expected, augmented & “potential” Distribution differentiation – new/multiple routes to market Price differentiation – low or premium? Promotional differentiation – iconic or creative communications Brand differentiation – from USP to UEP

Levels of product/service offering Hooley et al (2012)

Sustainable Competitive Advantage So there are a number of ways to create competitive advantage – but what about sustaining it? Central to offering unique and valued products & services is the identification of the key differentiating variables – those with the greatest potential leverage Role of innovation? Importance of STP Management of company reputation

Alternative emphases for differentiation Hooley et al (2012)

Factors affecting business strength Hooley et al (2012)

Dynamic marketplace strategies Successful competitive strategy amounts to combining attacking & defensive moves to build a stronger position in the chosen marketplace

Attack strategies A D t e f a c n k d e r r 4. Bypass attack 2. Flank attack A t a c k e r D e f n d r 5. Guerrilla attack 1. Frontal attack Drummond and Ensor (2005) 3. Encirclement

Market challenger strategies Hooley et al (2012)

Frontal attack Hooley et al (2012)

Flanking attack Hooley et al (2012)

Encirclement attack Hooley et al (2012)

Bypass strategy Hooley et al (2012)

Guerrilla tactics Hooley et al (2012)

Defence strategies A t a c k e r D e f n d r 2. Flanking defence 3. Pre-emptive defence 6. Strategic withdrawal 4. Counteroffensive 1. Position defence Drummond and Ensor (2005) 5. Mobile defence

Defensive strategies Hooley et al (2012)

Position defense Hooley et al (2012)

Flanking defense Hooley et al (2012)

Pre-emptive strike Hooley et al (2012)

Hit back at them where it hurts Challenger Defender Hit back at them where it hurts Counter Offensive

Mobile defense Hooley et al (2012)

Contraction (focus) defense Hooley et al (2012)

The military analogy Offers a much wider range of options and combinations for the competitive marketplace Acknowledges the immediacy of the competitive reality Talks in terms that business people recognise and relate to

Conclusion Never neat and tidy - as in real battle, confusion reigns alliances, acquisitions further confuse. But the company who sees the strategic situation most clearly, and plans…. wins

5 basic competitive strategies Build/growth strategies Hold/maintenance strategies Niche/focus strategies Harvest/reaping strategies Deletion/divestment strategies

Niche strategies Hooley et al (2012)

Harvesting strategies Hooley et al (2012)

Divestment strategies Hooley et al (2012)

S-T-P Week 8

Positioning ATTACKING Product People Price Physical Evidence Place Process Promotion 7Ps 4Ps The Marketing Mix

Learning Objectives: By the end of this session students will understand and appreciate: Why sustainable competitive advantage is important How competitive advantage is achieved in the first place and How competitive advantage is sustained in the long term